newjerseynewsroom.com

Company agrees to sell interest in Borgata Casino over alleged organized crime ties in China

The state Casino Control Commission Wednesday approved a stipulation of settlement between the state Division of Gaming Enforcement and MGM Mirage under which the company will surrender its qualification for a casino license in Atlantic City and place its 50 percent interest in the Borgata Hotel Casino & Spa into a divestiture trust.

The settlement relates to the May report by Gaming Enforcement to the Casino Control Commission regarding MGM Mirage's joint venture with Hong Kong businesswoman Pansy Ho to develop, own and operate the MGM Grand Macau hotel casino in Macau, China.

In the report to the Casino Control Commission, the Gaming Enforcement recommend, among other things, that MGM Mirage's joint venture partner in Macau be found unsuitable and that the company be directed to stop any business dealing with Ho.

The Associated Press reported that regulators found evidence that Ho's father Stanley Ho, an Asian casino operator, had extensive ties to organized crime in China.

Rather than contest the report before the Casino Control Commission, MGM Mirage decided under the settlement to divest its one-half interest in the Borgata. In doing so, the company did not admit liability and retained the right to receive all proceeds of the sale of its interest in the Borgata.

Gaming Enforcement investigated all aspects of MGM Mirage's joint venture with Ho to determine whether its actions and business association with her were consistent with the "good character, honesty and integrity" and the compliance obligations required by the state Casino Control Act.

"The integrity of casino operators and owners has always been of paramount concern to the Division of Gaming Enforcement, and that concern extends to a licensee's associates," said Director Josh Lichtblau. "In order to maintain the public's confidence in safe and fair gaming, we need to ensure the integrity of those who control the casinos. Public confidence, in turn, is critical to the overall economic prospects and health of gaming in New Jersey."

Gaming Enforcement's investigation included 35 sworn interviews of 17 people, including Ho and her sister, Daisy Ho, and numerous other investigative interviews.

Lichtblau said attorneys and investigators made several trips to Hong Kong and Macau, and traveled to many other locations inside and outside of the United States, seeking information. In addition, Gaming enforcement staff analyzed thousands of pages of documents, including emails and correspondence, and contacted numerous domestic and international law enforcement and regulatory authorities.

MGM Mirage has a 50 percent ownership interest in Marina District Development Corp., which owns the Borgata and is the entity licensed by the Casino Control Commission. MGM Mirage's joint partner in the Borgata, Boyd Gaming Corporation, owns the other half of Marina District Development and is the operating partner of the Borgata.

MGM Mirage will turn over its 50 percent interest in the Borgata to a trustee under a trust agreement which was also approved Wednesday by the Casino Control Commission.

Former state Supreme Court Chief Justice James R. Zazzali was appointed as the trustee.

MGM Mirage is required to sell its interest in the Borgata within 30 months. For the first 18 months, MGM Mirage will participate in the sale process. If no sale has been completed, the trustee will have sole authority to direct the sale process for the remaining 12 months.

MGM Mirage will be the sole economic beneficiary of the divestiture trust. Boyd Gaming will retain its one-half interest in the Borgata, and the divestiture by MGM Mirage will not affect the operation of the Borgata. Boyd Gaming was not a subject of the gaming Enforcement and report.

The lead attorney for Gaming Enforcement was Assistant Attorney General George Rover, who coordinated and supervised the investigation.

— TOM HESTER SR., NEWJERSEYNEWSROOM.COM